Biggest cloud of all: Amazon EC2 makes about $220 million a year

Anyone wondering how the commercial cloud computing business model is working should look no further than Amazon Web Services.Randy Bias just published estimates that AWS is pulling in about $220 million annually for its Elastic Compute Cloud (EC2) offerings.

Anyone wondering how the commercial cloud computing business model is working should look no further than Amazon Web Services.

Randy Bias just published estimates that AWS is pulling in about $220 million annually for its Elastic Compute Cloud (EC2) offerings. He bases his conclusions on "actual verified EC2 numbers plus some guesses and a rough model of it’s current annual usage." He also estimates that AWS runs about 40,000 servers to support the service.  EC2 probably grew at a rate of 10% from year to year, Randy believes.

Not bad for a business model based on increments of 10 cents to 80 cents an hour for standard usage. EC2 is a Web service that provides resizable compute capacity in the cloud.

With these numbers in hand, Randy also observes that they may also tell the story about the overall size of the infrastructure cloud computing (Infrastructure as a Service) market. Randy sizes this marker at about $400 million to $600 million, and growing about 10% to 20% annually.

The EC2 revenues represent about 1% of Amazon's revenues for the most recent fiscal year. ($19.2 billion.) Amazon has really effectively leveraged the capacity from its retail business to offer services to the rest of the market. Is this something other companies with large IT infrastructures can contemplate?